Customer satisfaction's erosion at the national level presents a serious stumbling block for the economy, the American Customer Satisfaction Index reports.

Posted Oct 9, 2015

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Customer satisfaction at the national level is at its lowest point in nine years, according to the American Customer Satisfaction Index (ACSI). The aggregate ACSI score for the second quarter of 2015 is down 0.5 percent to 74.3 on a 0-100 scale, its sixth consecutive quarterly decline.

"While a sustained decline in overall customer satisfaction is never good news, it may be particularly perilous now," said Claes Fornell, ACSI chairman and founder, in a statement. "About two-thirds of the economy is made up of consumer spending, and even though spending growth has edged up, it's still significantly below the long-term average and below what is needed for solid economic growth."

The research suggests that deteriorating customer satisfaction hurts consumer demand, but paradoxically, strength in the job market might have weakened customer satisfaction. Trained employees are leaving consumer-facing positions for slightly improved pay, and, to the extent that they are being replaced, it is often by less experienced and newly trained personnel.

"Only once in the past 20 years has ACSI plunged in a similar way: in 1995-1997. Like today, the period of sustained ACSI decline occurred several years after a recession and after both consumer spending and the job market had rebounded. The major difference between now and 20 years ago is that consumer spending growth in the late '90s had ricocheted to above-average levels, whereas consumer spending today has not even returned to its long-term average," Fornell explained.

According to Fornell, another potential cause for today's declining customer satisfaction could be rudimentary analysis of consumer feedback by many companies.

"Companies too often confuse raw data for information, but raw data alone are not instructive or particularly useful. Even though companies have more data, consumer research expenditure remains below 2008 levels," he said.

The ACSI model predicts consumer spending growth of about 2.6 percent to 2.8 percent for the next quarter, which it says is still too low for robust economic growth. As a result, it will be difficult for the economy to pick up speed unless customer satisfaction and discretionary income growth improve, Fornell concluded.